Microsoft’s Kees Hertogh's Insights on Enterprise ERP Trends and Microsoft Dynamics AX

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kees How are enterprise ERP buying trends changing, what are the main pain points in this space and how does Microsoft Dynamics ERP stand out from the competition? And does the trend toward simplification impact ERP projects?

At Convergence 2013 I had the opportunity to sit down with Kees Hertogh, Director - Product Management, MS Dynamics AX at Microsoft to get his insights.

Editor: What key message about Dynamics AX  should customers  take away from Convergence 2013?

Hertogh: We will continue to provide value and innovation at a pretty rapid pace. Innovating on native device experiences on both cell phones and tablets. This is a very immersive experience where we can deliver the next level of productivity for a broad set of users in organizations. We think both by Microsoft providing apps and enabling technology for customers and partners to build their own apps, we can really innovate in an organization with a new  experience on tablets and phones.

Editor: How has ERP software selection changed in the enterprise space?

Hertogh: Customers are looking more for very clear projects with a very distinct value and ROI. It might be shorter projects, but the individual projects are more focused and need to deliver more clear tangible outcomes. I think the world of big bang ERP replacements is gone. For example we see huge momentum in retail where people are trying to focus on merchandising of store management and having one integrated platform to do it. Their next step might be marketing automation. They look at distinct specific projects. Microsoft is the provider of that platform, that unifying fabric,  that allows them to deliver instant projects on one common platform.

In the past they were looking at separate best of breed solutions that basically ended up with a lot of middleware, which nobody wants. The ability of Microsoft Dynamics to deliver those capabilities across ERP and CRM on one unified platform, and deliver very compelling projects, from procurement to marketing automation is huge. Because they are all on the same platform it can accelerate delivering those projects inside the organization. That is where we see increased traction and a role for Microsoft as business application vendor.

Microsoft Dynamics AX now has 18,000 customers worldwide. In the last quarter we had 50% growth in Microsoft Dynamics AX in North America.

Editor: How would you differentiate Microsoft Dynamics ERP from the competitors? What should buyers look for and compare?

Hertogh:  There are three key things that buyers should look at:

First is the true life cycle cost – for licenses, make sure it is just about users; do you have to pay for transactional volume? Be clear about true ownership costs; there are some good practices for making that very clear to the buyer in the beginning.

Second is the cost of roll out and implementation – the cost to make it operational.

And third is the level of innovation – everyone talks about the consumerization of IT. Microsoft has built consumer electronics and consumer software and gaming software. We are the only vendor in the enterprise that has done that. We are working with people from the xBox Kinect team, we are working with people on the Office team, we are looking at those technologies and bringing them to the enterprise. And we are the only vendor that can actually do that. We just have to walk to another building, literally 40 feet away. Our ability to bring those technologies together for enterprise customers is critical. Our ability to continue to innovate and to increase the rate of innovation in the area of consumerization of IT is by far beyond any of our competitors.

Editor: Are there customers that stand out to you as using Microsoft Dynamics ERP in a unique way?

Hertogh: Every week I hear examples. One that comes to mind is Teck Resources, one of the biggest mining companies in the world. They need to operate mines; if the machines don’t work the mines don’t work. They use Dynamics AX to track maintenance of all the machines. The maintenance process of the big machines, how to keep them up and running, the processes and documentation are now stored in AX and served up on ruggedized devices in the mine. And they have a surface table computer and they can see with GPS locations exactly where the trucks are underground in the mine.

Keep in mind that the people that maintain them are not the young generation workforce, this is a mature workforce. The productivity impact Dynamics AX made on that organization was huge because it was all “tribal knowledge” and from an enterprise perspective these people are all close to retirement. There goes my tribal knowledge and my mine productivity. But the way they are able to serve up technology to their workforce in a way that they can adopt, in a ruggedized environment, is amazing.

Editor: What are the main pain points for enterprise ERP buyers?

Hertogh:  The key things we hear from customers include,

1)      Expansion and change. We see customers that are on a very aggressive acquisition strategy, they need a system, without high IT overhead, to keep up with this acquisition strategy.

 2)      Expand thru franchises – they have to get a system in place because as a franchise owner the only way to control the success is through IT systems. 

3)      Deeper onto shop floor – getting shop floor productivity under control, especially a focus in the US of being competitive and making sure from a hard core manufacturing capability they can compete with China. Making sure you are productive on the shop floor and get the most out of your employees. 

4)      Consolidation and simplification – simplifying their environment. We have seen it with Revlon, Dell, Chanel and other luxury consumer brands. (Revlon went from 21 ERP systems down to one, Dynamics AX). All of them are simplifying their environments and lowering IT costs and with that increasing their own agility to respond quicker.

Editor: Is this idea of simplification a key trend for Microsoft Dynamics AX?

Hertogh:  Moving from SAP to Oracle doesn’t simplify anything, there is still a lot of middleware. Having one Microsoft core architecture is one of the key things that enables and motivates companies to look into this strategy.

Deploying Microsoft Dynamics AX as an enterprise application is actually a way to simplify. There is an alternative now to those enterprise architectures that is a lot more nimble and simple. The speed that they can roll it out and get things under control is much faster than they could have gotten with Oracle and SAP. And the user adoption is higher; people actually want to use it instead of having to forcing it down their throat.

Editor: What trends will make an impact going forward?

Hertogh: Microsoft’s devices and services strategy, providing native device experience to a broad set of people and in those native device experiences increasingly utilizing more and more of the core technologies Microsoft has around social, around different device types and natural user interface technologies. There is so much more that we can do. If you go back to the history of ERP with maybe 15 to 20 percent user adoption in an organization, maximum, there is so much more we can do around productivity in organizations with the technology at hand. That is really exciting and we have just scratched the surface. And you will see us innovating on that in the next few years around bringing a complete new set of user experiences from Microsoft for these scenarios regardless of the device you are on. From a 10” phone screen to 70” TV screen and everything in between.

By Anya Ciecierski, ERP Software Blog Editor,

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